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I. INTRODUCTION
Economic history shows the importance of the economic sector to which the agricultural revolution is one of the
fundamental stages in its development process (Oji-okaro, 2011). Developing countries, Agriculture is an
important sector in economic growth and their development, (Koester, 1988). And on the realization of the
importance of agriculture in the economy, the government played a vital role in financing agricultural projects
(Santosh, 2015). The public expenditure’s efficiency depends on revenue performance. In another concept,
some of agriculture’s revenues flow to public expenditure (Mordecal, 2016) of the dynamic sector which is the
agriculture sector contribution (Abbas, 2016). The agriculture sector is one of the determining factors on the
development of human capital (K.jothi, 2016). Public spending is related to the flow of public resources from
government sources to different economic sectors (Ajay, 2018). It is distributed into the capital investment flow
where many producers are now querying whether modern agrarian systems are really effective and on taxpayer
issues (Ojeyika, 2017). The capital of public expenditure has been limited as debt on non-financial assets were
used on their acquisition while contemporary spending was constant (Ideba, 2013), like debts for non-repayable
activities in time (David, 2011). The current study and empirical study statistics indicate that the total public
expenditure (assets and recurrent) and the components have an indication to increase in the upcoming three
decades (Jude, 2018). Public expenditure played an important role in the realization process of the economic
and financial objective of the country, hence the value of public expenditure composition needs to be well-
funded (Bian, 2018). In support, where the development will include all economic sectors, analysis and control
of resource limitations is necessary to estimate the advantages of a special sector (Budiyan, 2014). Agriculture
and agro-economics is the new topic of research in China, and on a spectrum, the importance of the agriculture
sector in achieving self-sufficiency. This is the same reason that led the Chinese state to increase convention
spending to increase the output of the agricultural sector (Okezie, 2013). Since China started collective
agriculture in 1980, where its government used different models on its economic reform, China’s government
initiated the Household responsibility policy to manage and control the small plots and land for the egalitarian
(Zhun, 2017). China is also one of the largest countries in agriculture and also successful in that aspect
(Muhamad, 2018). However, the aim of this empirical study is to analyze the nexus between government
Source: made by Author based on China national statistics office data http://www.stats.gov.cn/tjsj/
Source: made by Author based on China national statistics office data http://www.stats.gov.cn/tjsj/
From Figure 3 above, we notice that since 1988 there was a gradual decline in the number of workers on
state farms, with a slow decline in the former state. This was according to the government policy which, since
2000, started new agriculture reforms in which the state transferred the ownership of farms and agricultural land
to individuals and private owners. After collective farms and globally collective agriculture interpreted the
decrease, they cultivated area which has more investor lease and invested in the government lands, and this was
in the context of San non-agriculture reform policy.
Ect= LNAOV-(1.5040*LNCA+1.3712*LNGEX+1.7927*LNNSF-0.13988)
Based on Table 3 and Table 4 above, the long and short run statistics equation, next to the test and the
analysis of the results, indicate the result found some variables are important in the long and short run. The long
and short run test indicated a positive correlation between Government Expenditure and Gross Output Value of
Agriculture in the long run. In the long run, the P-value indicates (P=0.0011) which is less than 5%, therefore
statistically significant but in the short run, the P value indicates (P=0.6674), which is larger than 5% and
statistically insignificant. China’s Spectrum is as such due to the long-term plans of the Chinese government,
thus working to provide government spending on the emergency term. There is no short-term schemes spectrum
due to the nature of the agricultural sector, which needs time periods to miss the year for optimum production
spectrum whether its products are agricultural or animals. The results of the current study were opposite to those
of previous studies such as the study by (Muhammad A., 2018). The study concluded that there is no impact of
public spending on the output of the agricultural sector in the case of Indonesia. The study by (J. C. Mgbanya,
2018) indicated a correlating relationship both in the long and short run in the case of Nigeria, following the
same context study by (Ebi, 2018). The empirical study test also indicated a positive correlating relationship
between the government expenditure and the agriculture sector output when indicating the impact of
government expenditures on the agriculture output with an average of 10% in the case of Nigeria. The study
result by (Santosh, 2015) indicated a positive correlation between the government expenditures and economic
growth including the agricultural output in the Nepal’s case. According to the present study, as a consequent of
the result, government expenditure impacted the agricultural output just in the long run. This is because in China
AJHSSR Journal P a g e | 178
American Journal of Humanities and Social Sciences Research (AJHSSR) 2019
the agricultural system is managed by the government with long term planning. This is different to other
countries where the agriculture sector is managed by the private sector, and there is no correlation relationship
between the government expenditure both in the long and short run. Cultivated areas are statistically significant
both in the long and short run which indicate the P-value to be less than 0.05 with (P-value 0.0001) in the short
run. It is also significant in the long run when (P-value 0.0048). There is a direct correlation between cultivated
land and the output of the agricultural sector in both the Franzer and the spectrum due to the fact that there are
seasonal agricultural products. This translates the relationship, in the long term, of the size of cultivated
agricultural land which is originally owned by the government and leased to farmers and investors as the state is
working to promote the agriculture sector. The Number of State Farms are also significant where the test result
indicates (P-value = 0.0000) in the short run. In the long run, the test result indicates P-value is more than the
5%, with (P-value = 0.1931). The test results indicate a short-term relationship between the number of
government farms and the size of the agricultural sector. Observation shows that there is no relationship in the
long term, and that is due to the nature of the sector in the state of China. Investors and farmers have recently
become inclined to cultivate land by taking advantage of the privileges granted by the Government, the
investment policy and the agricultural property in case the government farms are subject to conditions that make
domestic investors avoid investment in the farming sector where it needs capital, experience and background. In
the investment sector high risk rates are subject to the laws of the environment, thus makes the acceptance of
investors move away from the land cultivation that does not need the previous conditions. The support of the
Government of volume production and the occupied area spectrum due to the displacement of villagers from
villages to cities spectrum allowed the cultivation of the land that does not need permanent resident farmers. It
isn’t allowed in certain periods to reverse the government farms that require permanent residency for investors;
however the bound test technique assessed the long run link among the variables when the F-statistics is more
than the bound critical. When the F-statistics is less than the bound critical, this means there is no long-run
relationship between the variables, and when the F-statistics indicate result between the upper bound critical and
the lower bound critical, that means the long-run relationship will be indefinite as found out by (Mintz, 1990). In
Table 4, the F-statistics value (24.88) is large than the bound critical result (4.66), this result indicates a long-run
relationship between the study variables when the result was confirmed in the model result in general. Table2
above indicates the coefficient of the ECM (-1) result is negative (-1.5650), which also indicates it is statistically
significant. Following the test result, the Lm test result indicates (P-value = 0.90) and (P.chi-square = 0.6553).
This means the model does not have any serial correlation or statistics issues. Based on Pesaran, the error
correction expression ECM (-1) is statistically significant as the variables can buck to the equality average speed
possibly in unity shock (Bahram & Pesaran, 2009).
VI. CONCLUSION
This study concludes that based on the hypothesis stated at the beginning of this investigation study, it is
now possible to confirm and determine the impact of government expenditure on the agriculture sector output in
China. The study employed ARDL model to determine the long and short run relationship between the target
variable Gross Output Value of Agriculture and government Expenditure (GEX), Number of state farms (NSF),
cultivated area of state farms (CA). The study design used time sires data covering the period (1988-2018).
Moreover, the Augmented Dickey-Fuller test and the stationary test showed that the time series variables
were stationary at the first level. Test result indicated short-run relationship between the Number of state farms,
cultivated area of state farms and the agriculture sector output, where the test result indicated P-value to be less
than 5%. No significant result between the agriculture sector output and the government expenditure was
indicated. Following the test result in the long run, Government expenditure, cultivated area of state farms and
agriculture sector output indicated to have a significant result less than 5% and a negative result between the
Number of state farms and agriculture sector output with result more than 5%. Also, the study indicates a strong
Error correction Model with value (ECM =-1.56).
However, the government expenditure does not affect few of the study variables. The Chinese government
has been working to develop the agriculture sector by allocating programs and raising the volume of
government expenditure as the study showed on the agriculture sector both in the long and short term spectrum.
In order to show the importance as well as directly impact the socioeconomic provision of self-sufficiency of a
country like China of a large population, the Chinese government should allocate most of its expenditure to the
agricultural sector and the dependent farmers should use allocated farms to raise the size of the agricultural
sector output in the long term so as to ensure dynamism in the sector.